The Trader Harbor
  • Business
  • Politics
  • World News
  • Stocks
  • Business
  • Politics
  • World News
  • Stocks

The Trader Harbor

Stocks

Using the ATR Trailing Stop to Manage the Trade and Define the Trend

by admin March 8, 2024
March 8, 2024
Using the ATR Trailing Stop to Manage the Trade and Define the Trend

As its name suggests, the ATR Trailing Stop is normally used to trail a stop-loss for a long position. It can also be used to identify an outsized decline that could reverse an uptrend. Today’s example will show how to apply the ATR Trailing Stop on a breakout and use it to define the current uptrend in the Technology SPDR (XLK).

ATR is the Average True Range, which is a volatility indicator developed by J Wells Wilder. The bottom indicator window shows ATR (22) at 3.091 for the Technology SPDR (XLK). The green line on the chart is the ATR Trailing Stop (5 x ATR(22)). 5 is the multiplier. This means it is 5 ATR(22) values below the highest close since November 6th, which is when XLK broke out. When prices rise, this stop will trail prices higher and always remain 5 ATR(22) values below the highest close of the move.

Why did I pick 5 for the multiplier? At the time of the breakout, I choose 5 as the multiplier because this value placed the initial stop just below the late October low (gray line). This is the natural level to set a stop because it represents a support level based on a reaction low. Note that this indicator is part of the TIP Indicator Edge Plugin for StockCharts ACP.

The ATR Trailing Stop can also be used to define an uptrend. There were two sharp pullbacks during the current advance. The red shadings in early January and late February mark these pullbacks. The ATR Trailing Stop held in both cases, which means the pullbacks were less that 5 ATR(22) values. A decline that breaks the ATR Trailing Stop would be greater than 5 ATR(22) values and this would be an outsized decline. Trend changes often happen with outsized moves so I will be watching the ATR Trailing Stop going forward.

Chart Trader reports and videos focus on stocks and ETFs with uptrends and tradeable patterns. Each week we cover the overall market environment and then feature highly curated trading ideas. This week we covered the Copper Miners ETF (COPX), the Metals & Mining SPDR (XME), the Bank ETF (KBWB), Moderna (MRNA), Illumina (ILMN) and more. Click here to learn more and get immediate access.

///////////////////////////////////

0
FacebookTwitterGoogle +Pinterest
previous post
Biden slams Trump multiple times in State of the Union address
next post
The Hoax of Modern Finance – Part 11: Valuations, Returns, and Distributions

Related Posts

Stock Market Sell Off: Is the Bull Market...

December 20, 2024

Surprise Negative Divergence on Nasdaq Advance-Decline Line

March 27, 2024

Secular Shenanigans

October 28, 2024

What Happens When the S&P 500 Breaks Below...

May 25, 2025

This S&P 500 Rally is Defying the Experts...

September 24, 2024

Sector Rotation Warning: More Downside Ahead for US...

March 8, 2025

AMZN: A Case Study in Bearish Divergence

February 25, 2025

Nasdaq DROPS on Weak AMZN, TSLA & GOOGL...

February 12, 2025

Elevate Your Options Trading!

March 7, 2025

S&P 500 Makes a New All-Time High By...

April 27, 2024

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest

    • Fox One streaming service to launch ahead of NFL season on Aug. 21, at $19.99 per month

      August 7, 2025
    • Tim Cook to join Trump at White House for Apple investment announcement

      August 7, 2025
    • The Real Drivers of This Market: AI, Semis & Robotics

      August 7, 2025
    • S&P 500 Breaking Out Again: What This Means for Your Portfolio

      August 7, 2025
    • Virginia Dem gubernatorial candidate and ex-CIA officer took $50K from CCP-linked tycoon

      August 7, 2025
    • ‘Should have been prepared’: GOP senators fight for unified message on Trump’s ‘big, beautiful bill’

      August 7, 2025

    Categories

    • Business (1,325)
    • Politics (4,187)
    • Stocks (1,571)
    • Uncategorized (45)
    • World News (1,318)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: TheTraderHarbor, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 thetraderharbor.com | All Rights Reserved